LUẬN văn THẠC sĩ (KINH tế) adoption of cloud computing by SMEs in emerging markets (brazil)

MASTER IN BUSINESS ADMINISTRATION – PROJECT MANAGEMENT DISSERTATION ADOPTION OF CLOUD COMPUTING BY SME’S IN EMERGING MARKETS (BRAZIL) A dissertation submitted in partial fulfillment of the requirements of Dublin Business School for the degree of M.B.A in Project Management Frederico Brimbela (Student number 1706797) Thesis Advisor: Dr Brid Lane August 2013 Declaration: I Frederico Brimbela declare that all the work in this dissertation is entirely my own unless the words have been placed in inverted commas and referenced with the original source Furthermore, texts cited are referenced as such, and placed in the reference section A full reference section is included within this thesis No part of this work has been previously submitted for assessment, in any form, either at Dublin Business School or any other institution th 16 of August 2013 To my family in special to my wife: Your willing sacrifice, boundless support, and unending love that made this journey possible For that, I am forever grateful! ABSTRACT Cloud Computing is an exciting topic, which is providing a paradigm shif from computation as a product to computation as a service It is a phenomenon where various types of IT capabilities are centralized into data centers to ensure that such resources are available wherever and whenever they are needed and instead of purchasing costly hardware and sofware which requires installation, maintenance and configuration, Cloud Computing provides the usage of Cloud application and infrastructures based on pay per usage scheme To better understand the organizational application of Cloud Computing this research aims both to investigate economic payoffs from Cloud Computing investment and explores Cloud Computing adoption within the firm More specifically, the influential factors that impact adoption of Cloud-based technologies by Small and Medium Enterprises in Emerging Markets, in particular Brazil Opportunities and challenges in the area of Cloud Computing adoption and its impact in the growing economies are also discussed Brazil is South America's most influential country and an economic giant Brazilian SMEs and Entrepreneurs not have mass computation to run their applications and to meet the changing requirements Thus, Cloud Computing is growing by offering advanced IT applications to meet the rapid changing environment This dissertation is based on the study and evaluation of SMEs using Salesforce.com services and its adoption framework in Brazil For this study 170 Salesforce.com users from different SMEs organizations, were surveyed, a number of quantitative measurements were performed to provide a better understanding of some of the adoption aspects The main conclusion from this study shows for a better adoption companies should use these solutions as part of a strategic effort for the organization The proposed study can make contributions for IS adoption literature and emphasis aspects for a successful adoption of Cloud Computing solutions Key words: Adoption; Cloud Computing; Emergent Markets; Brazil; Salesforce.com; JEL Classification System: M15- IT Management; M10-General; M31-Marketing; Word Count: 18.492 Dissertation + 1.609 Self Reflection TABLE OF CONTENTS Introduction 1.1 1.1.1 Industry Context 1.1.2 Emerging Markets Context (focus Brazil) .4 1.2 Purpose 1.3 Target & Contribution 1.4 Motivation for this Research 1.5 Research Question 1.6 Brief Outline of dissertation 10 Literature Review 12 2.1 Cloud Computing 12 2.1.1 Characteristics and Technology 13 2.1.2 Cloud Computing Service Models 15 2.1.3 Deployment models of Cloud Computing 16 2.1.4 Cloud Computing Advantage & Disadvantages 18 2.1.5 Challenges of Cloud Computing 19 2.1.6 Impact of Cloud Computing in Business .20 2.2 Small and Medium Enterprises 22 2.2.1 Characteristics of SMEs .23 2.2.2 Characteristics of SMEs in Emerging Markets 24 2.3 Adoption .25 2.3.1 Technology Adoption 25 2.3.2 SMEs Adoption of Technology 26 2.3.3 Factors to be Considered in Cloud Computing Adoption by SME .29 2.3.1 Cloud Computing for SMEs 30 2.4 Context Emerging Markets .31 2.4.1 Why Emergent Markets for this study .31 2.4.2 Brazil Cloud Computing overview .32 Research Methodology 35 3.1 Research Structure 35 3.2 Sample 38 3.3 Ethics 39 3.4 Limitations 39 Data Analysis and Findings 41 4.1 General Sample Demographics Characteristics 41 4.2 Hypotesis Analysis .44 4.2.1 Hypothesis Analysis – Cloud Computing and its Technology 44 4.2.2 Hypothesis Analysis – Cloud Computing in the Organization 54 4.2.3 Hypothesis Analysis – Cloud Computing and the Environment 58 4.3 The findings 60 4.3.1 Conclusions and Recommendations 61 5.1 Objectives achieved 61 5.2 Validation of the laid hypothesis 64 5.2.1 Validation Hypothesis – Cloud Computing and its Technology .64 5.2.2 Validation Hypothesis – Cloud Computing in the Organization 67 5.2.3 Validation Hypothesis – Cloud Computing and the Environment 68 5.3 5.4 Fulfillment of purpose 60 Summary - Contributions to the Body of Knowledge 69 Future Research 71 Self Reflection 72 6.1 Learning styles 72 6.2 Masters Experience 74 6.3 Influence of learning style on the research 74 6.4 Development skills 75 6.5 Going Forward 76 References 77 Appendices 82 8.1 Email Invitation to particiapte in the survey .82 8.2 Survey 83 8.3 Descriptive Survey Analysis 92 8.4 Hypothesis Testing 97 8.4.1 Appendix H1 Testing – Cloud Computing and its Technology 97 8.4.2 Appendix H2 Testing – Cloud Computing in the Organization 118 8.4.3 Appendix H3 Testing – Cloud Computing and the Environment 125 LIST OF FIGURES Figure - Computing Cycle Figure - Social Media Revolution Figure - Map of Emerging Markets .4 Figure - Brazil Population Density .6 Figure - Conceptual Model Framework for the Research Topic .10 Figure - Illustration of Cloud Computing Model .12 Figure - Contributed technology fields to the advent of Cloud Computing 15 Figure - Simple Cloud Computing Model - Basic Cloud Services 16 Figure - Conceptual Model Framework on Cloud Adoption .26 Figure 10 - Company Segmentation by Size in Brazil 33 Figure 11 - Research Methodology Sequence Structure .35 Figure 12 - Cloud Computing Adoption framework .62 Figure 13 - Systems commissioning process 64 Figure 14 - Cloud Computing and its organizational changes 68 Figure 15 - Kolb's Learning Styles 72 LIST OF CHARTS Chart - Cloud Computing Market Forecast Chart - World Wide Cloud Computing Market Value in B$ Chart - Brazilian GDP growth 2001-2012 Chart - UE importance of SMEs in the different sectors 22 Chart - SME importance on the breakdown of EU-27 value added 23 Chart - Top 20 non-OECD countries of nominal GDP in 2010 31 Chart - Location/Brazilian State 41 Chart - Job Role 42 Chart - Job Level .42 Chart 10 - Business Model 43 Chart 11 - Involvement with Salesforce.com .43 Chart 12 – Salesforce.com service rates 45 Chart 13 – Salesforce.com Overall Experience 47 Chart 14 - Choices to deploy the technology 48 Chart 15 - Advantages of the Technology in the business 49 Chart 16 - Estimated time to achieve Return of Investment .49 Chart 17 - Recommended Salesforce.com 51 Chart 18 - Salesforce.com service helped to achieve business goals 51 Chart 19 - Estimated Return of Investment with Salesforce.com 52 Chart 20 - Estimated time it took to achieve the ROI with Salesforce.com 53 Chart 21 - Intention to continue to use Salesforce.com 54 Chart 22 - Salesforce.com plan for the next 12 months 54 Chart 23 - Professionals in CRM and non CRM using and not using Salesforce.com 55 Chart 24 - Recommend Salesforce.com to others .58 Chart 25 - Performance of Salesforce.com sales team 58 LIST OF TABLES Figure - Computing Cycle Figure - Social Media Revolution Figure - Map of Emerging Markets .4 Figure - Brazil Population Density .6 Figure - Conceptual Model Framework for the Research Topic .10 Figure - Illustration of Cloud Computing Model .12 Figure - Contributed technology fields to the advent of Cloud Computing 15 Figure - Simple Cloud Computing Model - Basic Cloud Services 16 Figure - Conceptual Model Framework on Cloud Adoption .26 Figure 10 - Company Segmentation by Size in Brazil 33 Figure 11 - Research Methodology Sequence Structure .35 Figure 12 - Cloud Computing Adoption framework .62 Figure 13 - Systems commissioning process 64 Figure 14 - Cloud Computing and its organizational changes 68 Figure 15 - Kolb's Learning Styles 72 ACKNOWLEDGEMENTS This dissertation is the culmination of a two year MBA journey that could not have been accomplished without the support of many people I am glad to have the opportunity to acknowledge them here First and foremost, I would like to express my deepest gratitude to my advisor, Dr Brid Lane, who has been a constant source of encouragement, wisdom and optimism I would like to express my gratitude to Salesforce.com, for its financial sponsorship for enrolling the MBA program I would like to thank my management team at Salesforce.com, during the entire course they encouraged, motivated, and accompanied me throughout my research: Arsenio Otero, VP Sales Development & Sales Strategy; Korstiaan Hardam, Senior Business Development Director; Charlie Weijer, SMB Sales Manager Southern Europe and to Sebastien Carre, Business Development Manager Southern Europe From overseas, I would like to highlight and express my gratitude to Wendy Close, Customer Research Director, who helped me with the data collection and to Pedro Martins, VP SMB Operations & Strategy for sharing his experience and for all the advices Last but not least, I would like to express my gratitude to Christophe Bichaut, Senior Manager Technical Support, for all the support I also would like to thank all the lecturers who participated in the delivery of the Dublin Business School MBA program Without naming anyone in particular, gratitude goes out to my MBA colleagues for two years of highly beneficial shared values and experiences ADOPTION OF CLOUD COMPUTING BY SMEs IN EMERGING MARKETS (Brazil) INTRODUCTION Companies are deciding for Cloud solutions to reduce up-front costs and overall IT spending, this way they are able to invest more in other initiatives such as Customer Experience rather than Hardware or Sofware That’s the real advantage of the Cloud, it lets businesses rethink where and how they set up their IT budget, and let them to focus more on what truly matters (Forbes, 2013) The topic of my research is the adoption of Cloud Computing solutions by Small and Medium size Enterprises (SMEs) in Emerging Markets (focus on Brazil) Cloud Computing isn’t a trend anymore it has become an important tool for many organizations (Vaquero, et al., 2009) It helps organizations to outsource their IT, instead from having it in-house A report from IDC suggests revenue of $26 billion from the Cloud Computing industry during 2012 (IDC, 2009) Another avant-garde report from Gartner in 2012, anticipates Cloud Computing as an influential technology with significant financial impact (Gatner, 2012) Their global forecast for Cloud services market’s revenue is to exceed $68.3 billion in 2010 and reach $222.5 billion by 2015 (Gatner, 2012), Chart bellow Chart - Cloud Computing Market Forecast Source: Gartner, 2012 SMEs are known to be a critical element of the economy According to the Observatory of European SMEs, more than 90% of all European businesses consist of less than 10 employees (European Commission, 2005) SMEs are important to almost all economies, in the world, but especially for Emergent countries that are more willing to grow and adapt to new technologies (Ocampo, 2005) The adoption of Cloud Computing solutions from Dublin Business School | MBA Dissertation | Frederico Brimbela SMEs’ is well known, but what is less well understood is how they are adopting these solutions and what motivate them to continue using it Brazil at the moment is a trend country Standard & Poor's, Moody's and Fitch, some of the worlds most important rating agencies, awarded Brazil with investment grade in 2008 Some of the reasons to focus this study in Brazil is because Brazil is also ranked the th th world´s largest economy and is expected to rank in the next decade, the country also plays a leading role in Latin American economy and politics, standing out with increased attractiveness in the international scene, it is going to be the stage of the next world cup in 2014 and Olympic games in 2016 (Forbes, 2012) 1.1 CONTEXT In this section it will be covered a briefly context about the Cloud Computing industry and its evolution, the Emergent Markets in general and focus on Brazil context 1.1.1 INDUSTRY CONTEXT The Information Technologies industry is very dynamic It's constantly changing, every single decade a very strong change happens, as we can see in Figure bellow Source: Salesforce com, 2011 Figure - Computing Cycle From the Mainframe Computing era in 1960 brought to us with IBM, with Thomas Watson Jr 1970 to the Mini Computers era with Ken Olsen Later the Digital Era Computing on the 80’s The following decade, another change, into the Personal Computer era, with Bill Gates leading these years In the 00’s we moved into a mobile era, led by Steve Jobs Now, in the 10’s we're entering into a new era, and this new era it's happening today, the one that is changing the way business and communication are done The model promises a shif from an organization required to invest heavily for limited IT resources that are internally managed, to a model where the organization can buy or rent resources that are managed by a Cloud provider, and pay per use Cloud Computing also promises scalability of resources a d on-demand availability of resources (Erdogmus, 2009) Another interesting fact is the number of users grew 10 times more (Figure 2) with each cycle (Howard, 2002) Source: Salesforce com, 2011 Figure - Social Media Revolution The beginning of Cloud Computing has sparked an interest in different organizations, institutions and users to take advantage of web applications This resulted in a new economic model for the Information Technology (Vaquero, et al., 2009) Business applications are moving to the Cloud The shif from traditional sofware models to the Internet has steadily gained momentum over the last 10 years Looking ahead, the next decade of Cloud Computing predictions say that will continue to grow, in the Chart Gartner predicts that in 2013 the worldwide market value of Cloud Computing is 140B$ Chart - World Wide Cloud Computing Market Value in B$ Source: Gartner, 2012 1.1.2 EMERGING MARKETS CONTEXT (FOCUS BRAZIL) Emerging Markets are nations with social or business activity in the process of rapid growth and industrialization, see Figure in dark blue The economies of China and India are considered to be the largest The seven largest emerging and developing economies by either nominal or inflation-adjusted GDP are the BRIC countries (Brazil, Russia, India and China), as well as MIKT (Mexico, Indonesia, South-Korea and Turkey) (The Economist, 2008) Source: Morgan Stanley, 2010 Figure - Map of Emerging Markets The ten big emerging markets are located in every part of the world They will change the face of global economics and politics, as they are a key swing factor in the future growth of world trade, global financial stability, and the transition to free market economies in Asia, Central Europe, and Latin America (Boguslavsky, 2011) These markets are also crucial to nonproliferation, improvement of human rights, environmental cooperation, and the avoidance of war in several critical areas (Subhash, 2006) Brazil Context Following three centuries under the rule of Portugal, Brazil became an independent nation in 1822 By far the largest and most populous country in South America, Brazil has overcome more than half a century of military intervention in the governance of the country to pursue industrial and agricultural growth and development of the interior Brazil is also South America's most influential country, an economic giant and one of the world's biggest democracies It is one of the rising economic powers over the past few years it has made major strides in its efforts to raise millions out of poverty Brazil is characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets (I.M.F., 2012) While the world´s average economic growth has remained either negative or close to zero since the outbreak of the 2008 financial crisis, Brazil´s GDP reached 7.5% in 2010, the highest score since 1986 Despite the 2008 global financial crisis, Brazil’s economy has grown at an average of 3.5% per annum since 2001 and forecasts suggest that such levels are likely to continue, Chart Chart - Brazilian GDP growth 2001-2012 Source: IMF, 2012 As one of the so-called BRIC , the country is rapidly becoming a global economic powerhouse and now ranks as fifh in the world by GDP Brazil is also arguably more westernized than its BRIC competitors and is developing a marketing culture similar to the USA and Western Europe (Subhash, 2006) Brazil has become a global benchmark thanks to its sustainable economic growth, social inclusion, expressive infrastructure investments and an industry which is under constant modernization The increase of purchasing power and the investment opportunities in sectors like oil & gas, real estate, agribusiness as well as upcoming major sport events (the 2014 World Cup and the 2016 Olympic Games) help make the world's sixth largest economy a safe investment destination (The Economist, 2008) With a population of 200M, the majority of Brazilians lives within 300 kilometers of the coast In Sao Paulo are approximately 12M followed by Rio de Janeiro with 6.5M While the interior, in the Amazon Basin, is almost empty (Figure 4) Source: index mundi, 2012 Figure - Brazil Population Density 1.2 PURPOSE In recent years Cloud Computing has been one of the most discussed references in the world of Information Technology The adoption of Cloud Computing has become one important subject for organizations, one question arises: what are the factors determining the adoption of Cloud Computing? BRIC is a grouping acronym that referred to the countries of Brazil, Russia, India and Ch na, which are all deemed to be at a similar stage of newly advanced economic development This dissertation attempts to provide a suitable roadmap, which will provide organizations develop better strategies for Cloud Computing adoption projects The purpose of this research is give to the reader a better understanding of what Cloud Computing is regarding to its adoption, implications as well as the process of adoption by SME in Emerging Markets (Brazil) The intention is to fill a knowledge gap in the field of Cloud Computing and provide the readers with knowledge that it will help to develop a better strategy for adoption of Cloud by looking at the experience of existing Salesforce.com customers and their decision to continue with Cloud Computing The aim is investigate the primary strategic issues in adopting Cloud Computing in an organization, not the technical features or the theory behind it 1.3 TARGET & CONTRIBUTION This work will give important insight into several areas of interest to different stakeholders First, it will add knowledge to the aspect of adoption in the Cloud Computing field Second, it builds detailed knowledge about the specific purpose to increase the value of future SMEs in Emerging Markets investments in Cloud Computing This research is intended for researchers in the Information Systems area by developing a discussion about the research topic It looks forward to facilitate professionals, executives, project managers to define the best roadmap for adoption of Cloud Computing by SME segment in Emerging Markets context Academically SMEs are the base for student projects and future employment, it improves the academic training of IT systems adoption It also provides learning to students to help them to develop IT adoption strategies/processes Cloud Computing skills are different from traditional systems development skills (Bridges to Technology Corp, 2005) Knowledge about the specific needs of the regional companies will support the Dublin Business School of ICT to focus its undergraduate training on relevant business challenges Finally, it could also support government initiatives aimed at stimulating the utilization of IS/IT and recommendations for foreign investment in Emerging Markets 1.4 MOTIVATION FOR THIS RESEARCH “Change is the law of life And those who look only to the past or present are certain to miss the future.” John F Kennedy (1917-1963) How aware are SMEs about the benefits of Cloud Computing? What are the main barriers and concerns towards Cloud migration for SMEs? Actually working within this context, as a Business Developer for Salesforce.com (a company leading in the Cloud industry) for EMEA and doing a MBA in project management In this 21st century, many companies are witnessing great revival and revolution in their business (Forbes, 2013) The world today is different from the world that we had decades ago due to large innovation and invention in the field of Business and Technology (ENISA, 2009) Cloud Computing is one of the emerging areas in the field of information technologies It comes with many risks and has been billed as a hot-growth area based on its potential benefits (Forbes, 2013) In the past few years, organizations have spent millions of dollars adopting SFA systems, and this continues to grow (Abdulaziz, 2012) Despite its significance, very little academic research has been devoted to understanding the factors that can influence the effective adoption of SFA systems Academic research on the adoption of Cloud Computing and in particular the building of customer trust is reduced Few works have been done on the models of adoption strategies for Cloud Computing Security is the main topic (Mather, et al., 2009) Industry publication points to the financial benefits of adopting Cloud Computing and the costs of migrating to Cloud Computing (ENISA, 2009) There is few published work on considerations of adopting Cloud Computing, as well as, the organizational impact that a Cloud Computing solution causes Business Practices have changed and technologies have transformed the way organizations share and communicate information Understand what are the major adoption factors for SMEs before and afer they adopted Cloud services and what are the main expectations of SMEs from these solutions? These are reasons that motivate the researcher to develop this study This dissertation aims to find a path, which will provide an understanding of factors that contribute for a Cloud Computing adoption to follow and pass by organizational issues Sales Force Automation is a information systems used in CRM Marketing and Management that help automate some sales and sales force management functions 1.5 RESEARCH QUESTION Many studies have been done to explain conceptually Cloud Computing, but few have looked at how it is being used Not only they are few, but they focus on just two general areas: the effects at the financial level, and the technical considerations involved None to date have looked at its usage and its adoption on SME and in Emerging Markets This research proposes to fill these gaps, by focusing on the behavioral characteristics of Cloud Computing adoption such as at organization level and the technology impact in the organization This research will deal with the reasons which affect the adoption of Cloud Computing The purpose of this thesis is to find the factors and indicate their importance in relation to their intention of using it What are these main factors and how important are they What are the influences on adoption and repurchase intention by Salesforce.com customers in Brazil? The focus will be on the theory of adopting Cloud Computing and what makes organizations adopted it Focus only on Salesforce.com active customers, only from SME segment in Brazil The objectives of this study are:    Identify the key drivers before and afer the purchase that drives a better adoption Understand the causes that drive to a potential repurchase intention; Identify if it’s possible for client and vendor collaborate for successful Cloud adoption project; Understand what are the reasons by which SMEs adopt Cloud Computing into their business; This study intends to research the correlation from the actual experience and the (re)purchase intention behavior Below are the alternative hypotheses, Figure 5:  H1: Cloud Computing technology characteristics are associated with its organizational adoption: o H1a: Cloud Computing complexity is negatively associated with its adoption; o H1b: Relative advantage of Cloud Computing is positively associated with its adoption; o H1c: Demonstrable result of Cloud Computing is positively associated with its adoption;   H2: Cloud Computing perceived results is positively associated with its organizational adoption of Cloud Computing; H3: Increased expectation for growing of Cloud Computing increases the expected value of potential returns, thereby increasing the possibility of adopting these solutions Source: Frederico Brimbela, 2013 Figure - Conceptual Model Framework for the Research Topic 1.6 BRIEF OUTLINE OF DISSERTATION This dissertation is organized into chapters Chapter-1 Introduction In this chapter, current chapter is presented an introduction and background of the industry and an overview of Emergent Markets, reasons of choosing this topic, objectives, motivation, research problem and an outline of every chapter Chapter-2 Literature Review In this chapter, concepts and issues of Cloud Computing, SMEs, Adoption and Emergent Markets are discussed with different writers’ views Factors responsible for adoption of technology by SMEs are also discussed Dublin Business School | MBA Dissertation | Frederico Brimbela 10 Chapter-3 Research Methodology In this chapter is presented the method which is used to data research and to answer to the research question Also reasons for choosing this method are discussed Chapter-4 Data Analysis and Findings Superficial and deeper analyses were done, in this chapter the survey results are presented and analyzed Data is interpreted and gathered in the light of the literature review presented in chapter Chapter-5 Conclusions and Recommendations In this chapter, the conclusions of whole dissertation are presented Recommendations are also presented for implementation of the research findings along with reflections of the learning experience  ... aspect of adoption in the Cloud Computing field Second, it builds detailed knowledge about the specific purpose to increase the value of future SMEs in Emerging Markets investments in Cloud Computing. .. Deployment models of Cloud Computing 16 2.1.4 Cloud Computing Advantage & Disadvantages 18 2.1.5 Challenges of Cloud Computing 19 2.1.6 Impact of Cloud Computing in Business ... experiences ADOPTION OF CLOUD COMPUTING BY SMEs IN EMERGING MARKETS (Brazil) INTRODUCTION Companies are deciding for Cloud solutions to reduce up-front costs and overall IT spending, this way